1st off, re: Smart(?) cars.
When the road is filled with Hummers, driving a Smart is not safe. I've seen a video of a collision test between a Smart ForTwo and a BMW sedan. The Smart bounced into the air and spun around before coming down. The best safety cage in the world cannot make up for a two-fold or three-fold difference in mass between two vehicles.
That being said, every person who buys a Smart, or a Yaris, or any of the other new tiny cars, is making our roads look that much more like European roads. If nobody bought tiny cars because there were still large cars on the road, then the cars on the road would never get any smaller. If gas prices stay high, or get higher, and more people buy tiny cars, then eventually our roads will look like European roads, and the Hummer-collision argument will no longer apply. The early adopters are taking the highest risk, which is what early adopters always do.
By the same token, you can't rely on bigger vehicles being safer, either. SUVs in particular tend to roll easier than other vehicles. I knew a woman a few years back who thought she'd always be safer in a 1970s/80s model car with a steel body than in an aluminum and composite car. Steel is harder to crush, but those steel cars weren't designed with crumple zones, so you get crushed along with the steel.
Re: Biodiesel
In the early days of any particular business, everyone has to figure out how to do things, and there is very little standardization. Production methods differ widely, as do the products themselves. Biodiesel is in that stage now.
Companies like the one scott11 works for will eventually be part of a "standard system" for making and selling biodiesel. Right now, though, many of the companies out there are just jumping into a field that looks profitable, and don't know how to make a consistent, high-quality product. Similarly, someone who scales up from producing their own biodiesel in a 55 gallon drum to selling it to service stations doesn't necessarily understand quality control.
The companies that can't produce reliable products will eventually be weeded out, but for the moment, the low-quality products throw suspicion on the high-quality products. At this point, it's "buyer beware", with all the problems that entails.
Re: Algae
Some of the algae-to-oil projects plan to use enclosed systems to grow algae, often forcing the algae/water mixture through clear tubes exposed to sunlight. It's much more efficient than growing algae in a pond that's open to evaporation. The problem, as many of us know, is that it can be hard to control which species of algae grow in a system. For example, wild hair algae strains could wreak havoc in facilities that count on their algae to act like cyano or diatoms. Someone will figure out how to keep the wild strains out, but it will take a while.
Re: (non-bio-) Diesel
The US doesn't use diesel as much as the Europeans for various reasons. Older formulations of diesel produced lots of emissions. Most of the service stations on the road are set up to dispense gasoline (yes, this one's a vicious cycle). The big manufacturers have invested huge quantities of money in the gasoline infrastructure, and switching to anything else will cost money. In some ways, clean diesel would be a good choice for the US, but I don't think it will take over quickly.